Hot Topics:

Study: Tax hikes will reduce jobs, cut into household income

By Michael Norton, State House News Service

Updated:
05/22/2013 08:01:14 AM EDT

BOSTON -- The tax-hike proposals moving through the Legislature this spring will result in 2,460 fewer jobs in Massachusetts and will lower disposable income by about $250 per household, according to a new study.

The Beacon Hill Institute at Suffolk University concluded the tax plan favored by House Speaker Robert DeLeo and Senate President Therese Murray would do less to diminish economic activity than the $1.9 billion proposal recommended by Gov. Deval Patrick. The governor's plan, according to the study, would reduce employment by 17,800 jobs and shrink disposable income by $480 per household.

While mindful that the tax increases they are pushing will put a pinch on those affected, Patrick and Democratic legislative leaders say the higher taxes will enable the state to make long overdue investments in the state's transportation network, creating construction jobs and putting the state in better position for long-term economic growth by making it more attractive to existing and potential businesses.

The Legislature's plan primarily calls for new taxes on gasoline, tobacco products and businesses.

"While the Legislature's more modest proposal produces less economic harm, lawmakers should recognize that linking infrastructure funding to taxing products such as tobacco and gasoline, whose consumption is falling and will continue to fall in the future, is a tenuous proposition at best," study author Rosolino Candela said in a statement.

Advertisement

"The governor and Legislature need to seek innovative alternatives to fund the state's infrastructure needs."

Patrick has repeatedly said that the reliability of proposed transportation revenues will be one of the major factors he'll assess when a tax bill reaches his desk. The MBTA, which Patrick oversees, is relying on a big chunk of the anticipated new transportation revenues to balance its budget and prevent fare hikes.

The House and Senate tax bills are pending before a six-member conference committee, which has closed its deliberations to outsiders. Both the House's fiscal 2014 budget and the Senate's fiscal 2014 spending plan rely on passage of new taxes to support spending that could total $34 billion in the fiscal year that begins on July 1. After Patrick threatened to veto the House tax plan, the Senate beefed up proposed transportation spending in its proposal, a move the governor described as a step in the right direction.

Welcome to your discussion forum: Sign in with a Disqus account or your social networking account for your comment to be posted immediately, provided it meets the guidelines. (READ HOW.)
Comments made here are the sole responsibility of the person posting them; these comments do not reflect the opinion of The Sun. So keep it civil.